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Leathering the storm

By LIANG QIWEN (China Daily)
Updated: 2008-10-27 07:52

German-invested firm Tan Tec collects the CO2 and dust and compresses them into bricks to be used as fuel.

GUANGZHOU: Guangzhou Tan Tec Leather Ltd, a Germany-invested leather manufacturing company, has chosen to stay in the Pearl River Delta (PRD) rather than move to less developed areas of China.

"Moving the polluting and labor-intensive enterprises out of the PRD cannot solve the current problems," Thomas Schneider, general manager of Tan Tec, tells China Business Weekly.

Moving out polluting enterprises will only expand the problems of environmental pollution and energy crisis to more places, he says.

"We'd rather fix the issue, not move the issue. The effective way is to change the current polluting plants into environmental-friendly production sites," he says.

Schneider says his company's products are produced according to the LITE manufacturing method, which means "Low Impact To the Environment".

Driven by the conviction that controlling the greenhouse effect is the major ecological issue for future generations, Tan Tec says its manufacturing process identifies and controls CO2 emissions.

Through the use of alternative renewable sources of energy, equipment, chemicals, recycling, and the latest technology in leather manufacturing, the company can offer the market materials while reducing the environmental impact during the manufacturing process, the general manager says.

In 2006, Tan Tec underwent a drastic water saving program and reduced water consumption by 48 percent, even below German Tannery standards.

With the advanced CO2 emissions and water control systems, Tan Tec can today produce its leather only emitting 3.5 Kg of CO2 per sq m of leather and using 21 liters of water. The average CO2 emission and water consumption for each sq m of this kind of leather is normally 8 kg and 85 liters when produced by conventional means.

The company has invested a lot of money in new machinery, but its costs have not grown because it has saved money by reducing water, electricity and oil consumption and costs, Schneider says.

Tan Tec is planning another factory in Vietnam's Ho Chi Minh City, but there are no plans to leave the PRD.

"According to new laws China can not claim back VAT when exporting leather," Schneider says. "In order to maintain our overseas business, we have to set up another factory in a place that allows us to export our products to the world market."

He says PRD would still be the core of Tan Tec's business, providing products to their Chinese customers, including shoe and automotive leather.

Tan Tec is a supplier for many branded companies such as Timberland, New Balance, Ford and Mazda.

An environmental protection award for its eco-saving solutions from the China Leather Industry Association (CLIA) last month, has also enabled the company to continue its business in the PRD with more confidence.

Established in 1995, Tan Tec now has about 700 employees, including nine experts from Denmark, Brazil, Uruguay, India and Germany.

Today, as the costs of labor and land keep soaring, Schneider says: "Everywhere is the same. The only thing we can do is to cut costs and improve productivity."

Tan Tec is a unique example when more businesses in the PRD are shutting up shop or moving and its story shows that it's still possible to stay in business under tough conditions.

(China Daily 10/27/2008 page5)